Welcome to Investor Education initiative of Goodwill ! 19.01.2019
Yet Another inventiveness to benefit minority Investors!
NSE the largest volume stock exchange in India, is time and again innovating new tools for the benefit of investors at large, particularly to support small investors who do not have the wherewithal to study the company or the market before investing their hard earned money. With the inherent risks involved in the market, great care and caution have to be exercised while investing in stocks. Some of the companies have proved to be fly-by night operators and taken the investors for a ride, in the past.
Now to the delight of investors particularly small ones, NSE is preparing a new and separate catalog of listed companies which are well-governed with high transparency, ethics and value so that the investors could rely on such companies before investing. This will be a special category on NSE listed companies. This leads to a paradigm shift from a mandate driven system to an incentive-driven system, says NSE Chief. This will motivate more and more companies to fall in line with the new norms to be included in this category. This will ensure strict/rigid norms and compliance are adhered to by them and will help the investors to track only such companies for investments, thus reducing the element of risks particularly for gullible and first time investors and hence a protection to minority investors. These companies will have more liquidity, higher valuations and better institutional investors with strict governance formula.
Currently there is no way to identify and distinguish better-governed companies from others. The new system will prove to be an incentive for companies to govern better. Only companies on the NSE’s main board with a certain net worth and average trading value above a threshold will be eligible to be part of the category. If they fail to comply with the new and strict norms they will be made to exit. Some of the new norms would be that such companies should have public shareholding of 40 % instead of 25 %, the Chairperson should not be the Chairperson of audit and remuneration committee, the promoter- directors will have to assume fiduciary responsibilities towards minority shareholders and strict compliance and reporting. These are some of the recommendations of an expert committee. These norms will be a little bit more than the normal compliance. This is an ongoing commitment. This will help the investors to judge better and take informed decisions. This move is inspired by Brazil Stock Exchange- Bovespa and followed by London SE. Track such companies before investing your money. Wish you all a profitable Investing! For any assistance call Goodwill- a just a call away!